What happened
Jackson Financial (NYSE: JXN) is having quite the day as its share price surged 22.1% higher on Thursday during morning trading. By 11:30 a.m. ET, the stock was up 18% to $36.69.
The markets were all flying higher, led by the Nasdaq, which was up about 6%, the Dow Jones industrial Average, up more 930 points, or 2.9%, and the S&P 500, which was up 4.4% at 11:30 a.m. ET.
So what
The market was surging on Thursday due to a good inflation report that saw the Consumer Price Index at 7.7% compared to a year ago, which is better than the 8% that the market had anticipated. Moreover, Jackson Financial had its own good news.
The annuities provider, which spun off from Prudential Financial last year, blew away earnings and revenue estimates in the third quarter. The company generated $4 billion in revenue, up from $1.6 billion a year ago, and beat the consensus estimate by 180%. Adjusted earnings per share, the preferred measure for the company, was $4.54 per share, down from $5.16 per share a year ago, but well ahead of $2.75-per-share estimates.
Retail annuities, the largest book of business, did $364 million in adjusted operating earnings in the quarter, down from $527 million in the third quarter of 2021. That number was primarily impacted by lower fee income as a result of reduced assets under management.
"We generated strong sales in the attractive [registered index-linked annuity (RILA)] market, increased our capital position at the operating company, and maintained robust levels of excess cash at the holding company. Our healthy balance sheet enables the ongoing execution of our balanced capital management strategy, including our continued commitment to returning capital to shareholders," Laura Prieskorn, president and CEO, said in a statement.
The company returned $39 million in share repurchases and $49 million in dividends. It anticipates finishing the year at or above the capital return target of $425 million to $525 million.
Now what
Jackson Financial has only been around a year as a public company, but it is already a solid income stock. It posted a $0.55 divided in the third quarter at a yield of 6.9% and a payout ratio of just 8.4%. It has an annual payout of $2.15 per share. It also has a solid capital position, with nearly $800 million in cash and highly liquid securities, which is well above its minimum liquidity buffer of $250 million.
As the second-largest annuity provider, Jackson Financial is among the market leaders. It has performed well in a tough market for annuities and should benefit as the market is expected to improve next year. It might be a good option for those looking for a solid income stock.
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Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool recommends Prudential. The Motley Fool has a disclosure policy.
